TTO pay and holiday entitlement calculations
The formula below seeks to ensure that the payment system for TTO employees is fair and secure on equal-pay grounds in comparison with all-year-round employees in the same organisation. The ratio of annual leave entitlement accrued per working day therefore needs to be the same for both groups provided that a TTO employee never receives less than 5.6 weeks.
Summary of calculations
Establish the year-round equivalent for comparison
Year-round contract total days: 365 days ÷ 7 x 5 = 260.71 total paid days.
260.71 days minus year-round contractual annual leave (incl. public holidays) = total working days.
Annual Leave ÷ total working days = annual leave accrual rate per working day.
Term-time only calculation:
Working days per year x annual leave accrual rate per working day = number of days’ annual leave entitlement.
Working days + annual leave days = total paid days.
TTO total paid days ÷ total paid days for year-round employees x 100 = pro rata pay % of full time equivalent provided this is not less than 5.6 weeks
Worked example
The example below is based on employee working a full-time pattern (37.5-hour) with 5-10 years’ service.
Year-round employee
The number of days available annually is 260.71 (365 ÷ 7 x 5). The annual leave comprises:
Basic annual leave 29 days
Public holidays 8 days
Total leave 37 days
Year-round employees with this leave entitlement work 223.71 days a year (260.71 minus 37) in order to produce a paid leave entitlement of 37 days.
Each working day therefore accrues 0.1654 days of paid annual leave (37 divided by 223.71).
Term-time employee
The TTO employee works 39 weeks, which is 195 working days.
Paid leave accrues 0.1654 days of leave for every day worked so the paid leave entitlement should be 195 x 0.1654 = 32.253 days.
The number of paid days (working days plus paid leave) per year should therefore be 195 + 32.253 = 227.253 total paid days per year, compared with 260.71 paid days for a year-round employee.
This can be expressed as a percentage of the all-year-round contract: 227.253 divided by 260.71 = 87.167% of the FTE.
The TTO employee should therefore receive 87.167% of the full-time equivalent pay.
(227.253 days is equivalent to 45.45 weeks (i.e. 227.253 / 5 = 45.45 weeks) consisting of 39 working weeks and 6.45 weeks’ holiday).
Summary look-up table – 39-week contract
The table below shows a summary of the calculations for a 39-week TTO employee for the three levels of leave entitlement in the NHS Terms and Conditions.
Year-round contract
|
Daily holiday entitlement accrual rate
|
Term-time contract (39 weeks)
|
|
(A) Working days
|
(B) Holiday entitlement (incl PH)
|
(C)
Total paid days
|
(D)
|
(E) Work-ing days
|
(F) Holiday
(incl. PH)
|
(G) Total paid days
|
Pro-rata pay %
(G) ÷ (C)
|
0-5 years’ service
|
225.71
|
35 days
(27 + 8 PH)
|
260.71
|
(B) ÷ (A) = 0.1551
|
195 days
|
(D) x (E) = 30.2445 days
|
(E) + (F) = 225.245
|
86.397%
|
5-10 years’ service
|
223.71
|
37 days
(29 + 8 PH)
|
260.71
|
(B) ÷ (A) = 0.1654
|
195 days
|
(D) x (E) =
32.253 days
|
227.253
|
87.167%
|
Over 10 years’ service
|
219.71
|
41 days
(33 +8 PH)
|
260.71
|
(B) ÷ (A) = 0.1866
|
195 days
|
(D) x (E) =
36.387 days
|
231.387
|
88.753%
|
The Brazel case and minimum leave calculation under the Working Time Regulations
The Supreme Court’s July 2022 decision in the ‘Brazel’ case (which upheld the Court of Appeal’s 2019 decision) means that where the calculation of a TTO employee’s annual leave entitlement results in an entitlement of less than 5.6 of their weeks, the Working Time Regulations require the annual leave entitlement to be increased to 5.6 weeks.
For example, a TTO employee working 35 weeks of the year (175 days) a year and with less than five years’ service would have the following calculation:
0.1551 x 175 = 27.14 days’ holiday.
If they worked five days a week 27.14 days = 5.4 weeks. They would need an additional 0.86 days’ leave to make their holiday entitlement up to 5.6 weeks i.e. 28 days.
This is the current interpretation of the regulations. Should there be any change, an update will be issued.
Term-time and part-time contracts
Where the term-time employee also works a part-time pattern i.e. fewer than 37.5 hours a working week, a two-element pro-rata calculation will apply in the pay calculation. NB if the employee works non-standard hours or the working hours vary per day please use the hours based calculation outlined below).
An additional check will be needed for the public holiday entitlement as the Handbook says the pro-rata calculation is rounded up to the nearest half day for part-time staff*
Worked example – 39 weeks per year, 15 hours week, 5-10 years’ service
Accrual per day = 0.1654 days (see look-up table above) (*but check public holiday rounding)
Total paid days = 227.253
(195 working days + 32.253 days’ holiday – see look-up table above)
37.5 ÷ 5 = 7.5 hours per day for full-time hours work pattern.
227.253 paid days x 7.5 hours = 1,704.4 paid hours per year for a 39-week TTO employee working full-time hours work pattern.
1,704.4 / 37.5 hours x 15 hours = 681.76 paid hours per year for a TTO employee working 15 hours a week.
For a year-round full-time employee total paid time = 260.71 days x 7.5 hours = 1,955.325 hours.
Combined pro-rata calculation = 681.76 ÷ 1955.325 = 34.87%
The employee should receive 34.87% of the salary of a full-time year-round employee.
Hours-based calculations
If a term-time employee was contracted to work 7 hours on a Tuesday and 3 hours on a Thursday (10 hours a week) for 39 weeks a year, it would be more appropriate to calculate their pay and leave entitlement based on hours rather than days.
Again, hours should be compared to those worked by an all-year-round equivalent (FTE) employee to calculate the proportion of leave and pay they are entitled to.
For a year-round full-time employee with 5-10 years’ service total working days are 223.71 (see table above).
Total working hours per year are 223.71 x 7.5 = 1,677.825 hours.
Total hours of leave are 37 days x 7.5 = 277.5 hours.
For the TTO (39 weeks) employee with 5-10 years’ service total working hours per year are 390 (10 hours a week x 39 weeks).
This equates to 23.24% of the hours of an all-year-round equivalent employee (390 ÷ 1677.825).
Therefore, the term-time employee should be entitled to 23.24% of the basic pay and leave entitlement of the all-year-round equivalent employee i.e. 64.49 hours of leave (23.24% of 277.5).
The Brazel case shows that a percentage and pro rata approach to annual leave for part year workers, such as TTO workers, may result in an individual receiving less than their entitlement under the Working Time Regulations. However, we consider that organisations are likely to find the approach set out above to be the most pragmatic way of dealing with annual leave entitlement for TTO workers. Provided employers ensure that a worker always receives the statutory entitlement of 5.6 weeks’ annual leave, taking the approach set out above is likely to be the preferred course of action by both workers and employers.
It should be noted that where workers undertake irregular hours, so that their pay changes from week to week, it will be necessary for employers to calculate pay for annual leave each time that leave is taken.